Apple will allow record labels to institute their long-desired price hike at the iTunes Store beginning April 7th, according to the L.A. Times. Citing unnamed sources, the newspaper said that Apple had begun notifying the record labels that the infrastructure support for variable pricing that charges more (US$1.29) for popular artists and songs will be in place on that date.

The variable pricing scheme will also include the ability for record labels to charge less ($.69) for less popular tracks, but it's been the high end on the minds of record executives since they first realized Apple had done what they couldn't, which was sell music online.

The Times said that some industry insiders were calling a 30% price hike in the middle of a recession with competition for entertainment dollars at an all-time high a mistake.

"This will be a PR nightmare. It is for the music industry what the AIG bonuses are for the insurance industry," Ted Cohen told the newspaper. Mr. Cohen is a former EMI Music executive who is now managing partner of digital media consulting firm TAG Strategic.

Band manager Jim Guerinot (Nine Inch Nails, No Doubt, The Offspring) asked, "Wouldn't it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?" Mr. Guerinot also said that a price hike is the wrong way to combat online piracy.

Russ Crupnick, a senior analyst for NPD Group, took the contrary position that $.30 isn't going to deter many people from buying the top pop acts. If he's right, the industry will see increased revenue from the higher pricing.

Apple infuriated the record labels for years by refusing to allow variable pricing. Apple CEO Steve Jobs reportedly told record suits that charging more than $.99 would be a mistake, but the labels had a major weapon on their side, Digital Rights Management (DRM).

Apple included DRM on their downloads at the demand of the record labels who feared everything new piracy. As pressure mounted from European agencies and government arms for Apple to allow iTunes downloads to work with non-Apple devices, the company needed changes in its agreements with the labels to remove the DRM requirements.

The labels saw this as the opportunity to get what they wanted in exchange, and what they wanted was the opportunity to continue to raise prices for music as sales fell. On April 7th, they'll get it.